Ireland in grip of recession, ESRI

chump

There was another thread on this the other day, now it's official, any thoughts?

http://www.rte.ie/news/2008/0624/economy.html

The Economic and Social Research Institute says Ireland is in the grip of an economic recession for the first time since 1983.

Economists are warning that Government borrowing will exceed EU limits next year if public spending growth is not curtailed to historically low levels.

In its latest Quarterly Commentary, the Institute forecasts that unemployment will exceed 7% of the labour force by the end of this year, and that the public finances will deteriorate sharply.
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The authors say this raises the prospect of a return to net emigration for the first time since the 1980s.

Economic activity is contracting and it is the first time that this has happened for 25 years.

The massive public finance surplus on which the Government based its election promises will be all gone by next year.

And net Emigration will be back for the first time since the 1980s with the numbers having to leave the country to find work exceeding those coming here by 20,000 per year.

All of these forecasts are included the latest Quarterly Economic Commentary from the ESRI which includes the Institute's fifth successive downward revision to its outlook for this year.

The report says the impact of declining consumption, slower exports, the building slump, and the international credit crisis have much been worse than feared.

It expects economic activity will now fall by 0.4%, and disposable income by 2.6% this year, the first annual reductions since 1983.

The implications according to the Institute are stark.

It argues that the Government should break European rules and borrow €11bn to run the country next year. It says pay restraint must be imposed in the public sector, and it calls for State agencies to do more to help the unemployed.

I think we'll be grand to be shure.!

Heisenberg.

This post has been deleted.

whiskeyman

Run for your lives!!!

Keano

Does this mean I will have to dip into my communion money?

faceman

RTE are saying its the first time since 1983. Today FM are saying 1986 and Newstalk are saying 1985!

Im against government borrowing at that level. They squander that money they have. Bring back Ray McSharry, all is forgiven, he will save the day!

xzanti

I hope everyone likes jam sandwiches..

Maximilian

I for one welcome our new negative growth overlords.

gixerfixer

No there's not.Emmmm everyone just keep shopping.Sure we'll be fine:(

gurramok

The credit tap has run dry, would ye ever stop tearing up those credit cards and do your patriotic duty to spend till you drop!

Rb

Seriously, anyone who's voted for Fianna Fail in the past should be prevented from leaving the country for the foreseeable future and made stay to fix what they've caused. Pr1cks.

Interesting Link

pvt.joker

Rb wrote: »

Seriously, anyone who's voted for Fianna Fail in the past should be prevented from leaving the country for the foreseeable future and made stay to fix what they've caused. Pr1cks.

+1

gixerfixer

Rb wrote: »

Seriously, anyone who's voted for Fianna Fail in the past should be prevented from leaving the country for the foreseeable future and made stay to fix what they've caused. Pr1cks.

Interesting Link

Cue the FF lemmings coming on and defending the wasters:rolleyes:
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whiskeyman

Rb wrote: »

Interesting Link

From Link wrote:

1990

Ireland's participation in the 1990 World Cup in Italy is seen by many commentators as crucial in restoring the nation's pride.

Looks like all our hopes of coming out of this recession are on Traps shoulders to qualify for the World Cup!

Pompey Magnus

whiskeyman wrote: »

Looks like all our hopes of coming out of this recession are on Traps shoulders to qualify for the World Cup!

I wonder how long until FF try to pin the blame for the recession on Brian Kerr and Steve Staunton?

justcallmetex

Rb wrote: »

Seriously, anyone who's voted for Fianna Fail in the past should be prevented from leaving the country for the foreseeable future and made stay to fix what they've caused. Pr1cks.

Interesting Link

I'm for that 100%

Golferx

Originally Posted by From Link
1990

Ireland's participation in the 1990 World Cup in Italy is seen by many commentators as crucial in restoring the nation's pride.

And that, in a nutshell, is a complete and utter load of b0llix.

We had mortgage interest rates of close on 20%, in 1993/4, a currency crises caused by Bertie Ahern, we had falls in house prices around the same time too, so to claim WC 1990 had a positive effect is just baloney.

As for the current situation?

Given we had Bertie as Taoiseach for 10 years and Ministers of the likes of Ray Burke, Dick Roche, Noel Dempsey, Martin Cullen, Mary Coughlan and Brian Cowan, how could anyone be surprised at the situation we find ourselves in? These people were not and are not capable of intelligent Government.

To all those who voted FF? Thanks a bunch.

I honestly think I am ****ed. The company I am in is falling apart so much. Have a holiday for two weeks after Thursday and I am off to Berlin. So will need to do some serious thinking when I get back.

Rb

pvt.joker wrote: »

+1

gixerfixer wrote: »

Cue the FF lemmings coming on and defending the wasters:rolleyes:

justcallmetex wrote: »

I'm for that 100%

Ok, I take it I have your support. We need to overthrow the current Government and place me in as head of Government.

Then we can begin rounding up and branding those who were/are involved in FF societies in college (lists will be available through the colleges), since it's impossible to get a list of actually voted for them, we'll just aim at their supporters, including anyone who has been to a fund raising event or has donated to the party in the past.

I'll introduce a special tax on said people and liquidate their assets on behalf of the state.

Pm me and we can get organised and rally up more support.

seamus

To be fair, that indo/herald article is a pile of balls. "Two decades and we're back to where we began"? Complete bull****.

We're in a very different economic environment than we were back then. Most of us have jobs, are well educated, and well settled. We'll see emigration, but nothing like what we had back in the 80's - the problem back then was that the well-educated had to leave to find jobs. Now, most of the well-educated have jobs, and the vast bulk of those leaving college will find a job within a year.

The bulk of the impact will focus on the downturn in building/housing. That industry needs to correct itself, and the vast majority of those leaving for other shores will have been employed in that industry. The construction industry for whatever reason never saw this coming. The vast majority of construction workers, from what I've seen, are shocked that suddenly there's no more work for them, even though the writing's been on the wall for nearly three years now.

I have a mate who started an apprenticeship in plumbing in 2003. A year later, he had taken a year off to work on a site, getting paid €18/hour to basically make tea and carry stuff around. I told him to go finish his apprenticeship, that he's not going to continue getting that kind of money. His response was basically, "People are always going to need plumbers, why would I bother going to Fás and getting nothing when these guys are giving me tonnes of money?". He still hasn't finished his apprenticeship and is coming back to Ireland after an extended holiday. I very much doubt he's going to get work anywhere.
His attitude though seems to be typical of people who entered the construction industry in the early 2000's. Indeed, it seems to be typical of those who entered I.T. in the late 90's.

SimpleSam06

rb wrote:

I'll introduce a special tax on said people and liquidate their assets on behalf of the state.

Yes, nothing like a good Stalinist purge to set your economy on the right track. :rolleyes:

On a more realistic note, the ESRI has it right - the public sector is wildly out of control and needs to be reined in. This means redundancies, wage reductions, and hiring freezes, and to hell with the strikes. We have twice the number of nurses as the European average, and they are pulling a lot of overtime; did I miss a war or plague here recently? Non contributory pensions, I'm looking at you.

Effective management of the government needs to be introduced post haste, directing available funds into sustainable domestic industries and infrastructure. Pro consumer measure need to be taken to encourage spending, and ideally we should try to regain control of our interest rates because the ECB doesn't give a damn what happens to this particular rock.

digitally-yours

read the following in todays FT. Interesting atricle

Ireland is wrong to put its miracle at risk

By Wolfgang Munchau

Published: June 23 2008 03:00 | Last updated: June 23 2008 03:00

After a week of what European leaders call reflection, another Irish referendum beckons, to be held early next year. Without it, there might well be an attempt to oust the Irish from the European Union.

A Yes vote in a second referendum is not certain, even if the Irish government were to succeed in securing another rent-extracting, treaty-amending protocol. At a time when the Irish economy is about to fall off a cliff, enthusiasm for the EU and its treaties will not increase. In other words, holding a referendum would be as risky as not holding a referendum. A fine mess.

So within a couple of weeks, the chances of Ireland ending up outside the EU have turned from zero to a distinct possibility. The same goes for the Czech Republic, another potential non-ratifier. I do not want to get into the legal details of how a country's departure from the EU could be accomplished. Suffice it to say that it can be done within European law as long as there is political will.

What strikes me the most about this extraordinary turn of events is the perception in Ireland that a break with the EU would be no big deal. I received a large number of letters from Ireland last week from readers who steadfastly maintain that the country's economic success had nothing to do with the EU and everything to do with domestic policy - in particular with low corporate taxes and skilled labour.

The view expressed by those correspondents is as wrong as it is revealing. If so many people are delusional about their country's economy, then we should perhaps not be surprised about the outcome of the referendum. It is therefore perhaps worth looking in some detail at the nature of Ireland's economic success over the last 30 years to gauge what life might be like outside the EU.

There are several interactive factors. The importance of EU subsidies is almost certainly overrated. They played some part, especially in the early phase of the country's economic renaissance. In any case, Ireland is on the verge of becoming a net contributor to the EU budget. But one would be even more mistaken to conclude the opposite: that the EU matters nothing or little.

Ireland was one of the early and enthusiastic members of the European Monetary System in 1979, which brought much needed macroeconomic stability. Membership of the eurozone in 1999 led to lower interest rates, which have contributed to the economic growth ever since. Low corporate tax rates certainly helped Ireland attract foreign investors. But never forget that Ireland is also the only English-speaking member of the eurozone, the one place where eurozone and Anglosphere meet.

The country naturally benefited from membership of the EU's internal market. Without it, Ryanair, the Irish low-cost airline, would not be able to offer its popular flights across Europe. The Irish have also proved influential in the management of the internal market, not least through Charlie McCreevy, the Irish commissioner in charge of the EU's internal market and financial services. As a member of the EU, Ireland has been in a position to veto motions that would have impaired the country's economic success. Without steadfast opposition from Ireland, the EU would have made more headway in imposing corporate tax harmonisation.

I do not want to play down the importance of domestic policies either. Ireland owes its success to a complex set of policies and circumstances. Perhaps among the most important were the various tripartite social partnership agreements since 1987, through which the government, employers and the trade unions achieved a combination of wage moderation, high employment and low taxes. This form of round-table corporatism works best in tiny open economies if it works at all. It is ironic that this country, whose officials take pleasure in hectoring others on free-market economics, is in fact one of Europe's most corporatist states. Even France and Germany cannot produce so much social partnership, and I can assure you that this is not for lack of trying.

So what would happen if Ireland were to leave the EU? As an associate member of the single European market, Ireland would probably attract less foreign investment than it does today. Dublin's financial centre would be demonised as an offshore tax haven and treated on par with Liechtenstein. We would see lots of Ryanair flights between Dublin and Cork and the EU would put even more pressure on Ireland to raise corporate taxes.

Oh, and by the way, Ireland would no longer be a member of the eurozone. The Irish could use the euro if they wanted to but this would be like Panama using the dollar - a little sad, really. There would be no Irish voice in the European Central Bank's governing council warning that this is not a good time to raise interest rates. Leaving the EU involves a huge loss power and influence.

To put it mildly, the No vote is highly risky. Considering that the country is now on the verge of a severe economic slowdown, brought on by a downturn in the real estate market and the credit market crisis, it could not have come at a worse time. Not only does the No vote carry risks, it is a highly asymmetric gamble that brings no material benefit under the best of circumstances. The No vote put Europe's most impressive economic miracle at stake, and the cards are not looking good.

http://www.ft.com/cms/s/0/2856b69a-40bb-11dd-bd48-0000779fd2ac.html?nclick_check=1

biko

Wow, steo123 knew this Friday. Kinda funny reading some replies again.

"The main culprit is still the collapse in house construction, which has plunged from 75,000 units last year to just 30,000 next year. This fall is so serious, it wipes out all the growth in the rest of the economy"

Rb

SimpleSam06 wrote: »

Yes, nothing like a good Stalinist purge to set your economy on the right track. :rolleyes:

They caused it therefore I, once in power, will ensure they are made contribute towards fixing it more than anyone else.

I take it you don't want any part, SimpleSam? That's fine...

Those who oppose me will pay :pac:

Kold

So can we kill all the knackers now? *brandishes master sword*

Rb

Kold wrote: »

So can we kill all the knackers now? *brandishes master sword*

Ah Kold, the knackers are the last people to concern ourselves with right now. We need to punish the businessmen that made donations to the FF farce, the college kids who went out canvassing etc.

SimpleSam06

Rb wrote: »

I take it you don't want any part, SimpleSam? That's fine...

Those who oppose me will pay :pac:

Heyy, I'm just a humble businessman. I'll be selling boxes of ammo to both sides.

/looks like we might be needing those nurses after all

ejmaztec

Legalise drugs, tax the dealers, problem solved. Celtic Tiger becomes Celtic Dragon.

FlutterinBantam

Did anyone seriously think with the price of houses in Ireland and Dublin in particular that there would not be a blow out???

3 bedroom semis going for up to 7-800,000?

Seamus is right, the lure of the quick buck will catch a lot of people out,like the punters who quit school early to earn "Big money" in dead end jobs.

Chickens coming home to roost for them big time.

And just remember ,next time the well paid nurses/doctors/porters/cleaners/consultants/managers of the HSE look for a raise,and you support them,what you are saying basically is.

"Lads,I'm struggling to keep my head above water,but you lads in the state service deserve more,so I'm going to put my hand in my almost empty pocket and give you more every week as, you are so overworked and underpaid. Sorry that I might lose my job next year,but you guys deserve more so I'll take the cut in my income".

because that's essentially what you are saying.

ejmaztec

ejmaztec wrote: »

Legalise drugs, tax the dealers, problem solved. Celtic Tiger becomes Celtic Dragon.

LOL, good stuff. Eh lads, how much is the dole, honestly? Actually ****ting the bed here. I bet you I come back and I dont have a job. Even more reason to get blazed in Berlin so

Rb

KaG1888 wrote: »

LOL, good stuff. Eh lads, how much is the dole, honestly? Actually ****ting the bed here. I bet you I come back and I dont have a job. Even more reason to get blazed in Berlin so

€197.80 per week i.e sweet fck all

Don't worry though, KaG, you've always been supportive so help organise the Rb movement and I'll ensure you get one of those nice brown-envelope-taking-gobshíte-Fianna-Fail-supporters house and job.

Hitchhiker's Guide to...

Seems we're the only country to not be trying fiscal stimulus. The simple truth is that the best way to regain growth would be to cut the top rate of tax. This gives more disposable income to those who actually will spend it. Although there is no way that cutting the top rate of tax would actually be politically feasible.

regarding FF. Come on, every other party is ****e as well. There are no good political parties in the country. FG policies were virtually exactly the same as FF.

Marcus.Aurelius

What amazes me is the attitude of the unwashed masses. They all seem to be wetting themselves with worry, yet very few are asking the all-important question, i.e. "Who's to blame?"

And there we have it, the crux of the matter. Fianna Fáil. Ushered into a flying economy by the previous Rainbow Coalition. Squandered puplic money by giving it away to buddies in the construction industry, paying 10 times more than the cost for any infrastructure project.

Tunnelling money into Health by hiring 1000s of administrators while the service fell apart at the seams. Crushed our competitiveness by letting house prices, wages etc. skyrocket without restraint.

Our low corporate tax doesn't matter anymore. Businesses can't afford to pay our ridiculously huge salaries or expand their business because of sky-high land and capital costs.

And you know what? If there was an election tomorrow the fools would vote them in again.

Its pathetic :mad:

And don't whine on about other parties being the same, we should have at least changed government to stop them from becoming so arrogant, self-righteous and thoroughly incompetent.

Elessar

Bring in a one child policy. If you want anymore you would have to pay through the nose in taxes. Less mouths to feed, less screaming kids, less soccer mom yummy mummys in their SUVs. More money for Ireland, less CO2 for the earth, less education crowding.

Support Elessar in the next general election.

Christ, thats terrible...still living at home which is a bonus I suppose... The most worrying thing is if I get another job I'd be the first they'd sack with the usual last in first out policy. I work in a Mortgage Brokers at the moment, the commission cuts along with the housing market have kicked us into a corner. The boss is a really sound fella and would look after us if he had to let us go as he has done with others but hes a business man. Im the newest here being here a year and a half, he has kept me over other people hes had to let go but I can just see it coming now. What the **** am I going to do!?

zuutroy

I'm coming back to Ireland in a few months. Nice timing obv...cheap house plz...

FlutterinBantam

You could start by saving a few bob.

spadder

fire half of the civil service, get the other half to stop dossing for half the day and do an honest days work. problem solved. It will be cheaper to keep them on the dole doing nothing than in an office doing nothing.

stevoman

Marcus.Aurelius wrote: »

What amazes me is the attitude of the unwashed masses. They all seem to be wetting themselves with worry, yet very few are asking the all-important question, i.e. "Who's to blame?"

And there we have it, the crux of the matter. Fianna Fáil. Ushered into a flying economy by the previous Rainbow Coalition. Squandered puplic money by giving it away to buddies in the construction industry, paying 10 times more than the cost for any infrastructure project.

Tunnelling money into Health by hiring 1000s of administrators while the service fell apart at the seams. Crushed our competitiveness by letting house prices, wages etc. skyrocket without restraint.

Our low corporate tax doesn't matter anymore. Businesses can't afford to pay our ridiculously huge salaries or expand their business because of sky-high land and capital costs.

And you know what? If there was an election tomorrow the fools would vote them in again.

Its pathetic :mad:

And don't whine on about other parties being the same, we should have at least changed government to stop them from becoming so arrogant, self-righteous and thoroughly incompetent.

very well said i have to admit!

seamus

Roundtower2 wrote: »

Seems we're the only country to not be trying fiscal stimulus. The simple truth is that the best way to regain growth would be to cut the top rate of tax. This gives more disposable income to those who actually will spend it.

Urgh. I would be wary of stimulating growth simply by providing more disposable income. If the last ten years have shown us anything, it's that when people have more money to spend, prices will increase to take that money.

If you cut the top rate of tax, you're basically providing free money to people who are pretty comfortable. So when the prices rise, it's the people on the bottom rate of tax who will suffer because they don't have any extra money to cover the price increases.

It's not really possible to artifically spend your way out of recession without inward investment.

Marcus.Aurelius

seamus wrote: »

It's not really possible to artifically spend your way out of recession without inward investment.

Very good point

Kev_ps3

Shouldnt we now end the madness of open boarders and leave Irish jobs for Irish workers? Things could start to get nasty if we dont...

biko

Marcus.Aurelius wrote: »

yet very few are asking the all-important question, i.e. "Who's to blame?"

It seems to me more people in this thread are wanting to find someone to blame rather than someone to fix things.

kevpants

Ah sure success didn't really suit us Irish anyway. Far too many pr1cks in BMW's and linen trousers for my liking. Wouldn't have happened in the 80's... Opel Kadett's and knitted jumpers all they way. And everyone was sound cos everyone was broke.

It might bring some light relief to the situation seeing how the teenage generation of the moment (Drummies & goys with interesting hair etc who have never dealt with hand-me-down gola football boots with 3 studs left in them) cope when things get tight. I can't wait to overhear some of the conversations:

"OMG Oi caaaan't believe it. Myself Fiachra and Oireachteas have to go on this "Dole" thing cos Dad says he can't get us those jobs in his company. I mean loike whash!?"

mikemac

Kev_ps3 wrote: »

Shouldnt we now end the madness of open boarders and leave Irish jobs for Irish workers? Things could start to get nasty if we dont...

Share a border with the UK so it gets realy messy if we don't copy them.
Now if the UK decided to do something here, it's certain that Ireland will follow

@Marcus.Aurelius, quality post above!

FlutterinBantam

Kev_ps3 wrote: »

Shouldnt we now end the madness of open boarders and leave Irish jobs for Irish workers? Things could start to get nasty if we dont...

Why so?

The jobs were always there for Irish workers,we just didn't want them.

Rb

biko wrote: »

It seems to me more people in this thread are wanting to find someone to blame rather than someone to fix things.

I know who to blame and want them punished, then we can talk about fixing things

SimpleSam06

So what would happen if Ireland were to leave the EU? As an associate member of the single European market, Ireland would probably attract less foreign investment than it does today.

Ah here it comes, the threats. Democracy at its finest. We're all equal in the EU, just that some are more equal than others. Unless there is a real financial difference to Irish based corporations, there is no reason we would attract less foreign investment. None.

digitally-yours wrote: »

Dublin's financial centre would be demonised as an offshore tax haven and treated on par with Liechtenstein.

Any more so than it is already?

and the EU would put even more pressure on Ireland to raise corporate taxes.

It doesn't matter how much pressure the EU brings to bear on our corporate tax rates, to take them away would be economic suicide for the country, so its never going to happen.

There would be no Irish voice in the European Central Bank's governing council warning that this is not a good time to raise interest rates. Leaving the EU involves a huge loss power and influence.

We have no real influence on the ECB as it stands. Their only mandate is to control inflation, and they are focused on the largest economies in Europe. So no loss there.

it is a highly asymmetric gamble that brings no material benefit under the best of circumstances.

Except the return of our much-debated fishing grounds, which produce as much as 40% of the fish consumed by Europe, and certainly multi billions of euros annually. This would also mean that the Spanish, Dutch and French fishing industries would take a hammering, although I would sleep soundly at night were that to happen.

Sherifu

We need George Lee and Eddie Hobbs to save the country.(They'll have to decide who gets the cape)

Marcus.Aurelius

biko wrote: »

It seems to me more people in this thread are wanting to find someone to blame rather than someone to fix things.

[Sarcasm]I guess i'm a bit annoyed that FF expect us all to tighten our belts and accept our situation after their indiscretions and mistakes.

You're right, I'm being selfish. It isn't their fault at all.[/Sarcasm]

We wouldn't have to fix anything if they weren't so god damn awful.

FlutterinBantam

kevpants wrote: »

Ah sure success didn't really suit us Irish anyway. Far too many pr1cks in BMW's and linen trousers for my liking. Wouldn't have happened in the 80's... Opel Kadett's and knitted jumpers all they way. And everyone was sound cos everyone was broke.

It might bring some light relief to the situation seeing how the teenage generation of the moment (Drummies & goys with interesting hair etc who have never dealt with hand-me-down gola football boots with 3 studs left in them) cope when things get tight. I can't wait to overhear some of the conversations:

"OMG Oi caaaan't believe it. Myself Fiachra and Oireachteas have to go on this "Dole" thing cos Dad says he can't get us those jobs in his company. I mean loike whash!?"

heh heh are you a son of Joe Higgins by any chance.

One of the reasons these guys have beemers and linen is that they for the most part worked and studied and gained qualifications and took risks to get them instead of pissing their money and brains down the urinal of the local pub.

Dord

KaG1888 wrote: »

I honestly think I am ****ed. The company I am in is falling apart so much. Have a holiday for two weeks after Thursday and I am off to Berlin. So will need to do some serious thinking when I get back.

You and me too. I'm off on holidays next month to Germany and I'm not sure whether my job will still be here when I get home. Add to that the company being sketchy on details, it isn't very reassuring.